Navigation Links
Globalized economy more sensitive to recessions
Date:10/18/2010

By applying the same rules that explain how genomes evolve, Rice University physicists have shown that the world economy is more sensitive to recessionary shocks and recovers more slowly from recessions now than it did 40 years ago, due to increased trade globalization.

Their findings are available online and will appear in an upcoming issue of the Physical Review Letters.

"Standard economic theory suggests that trade networks with a more modular structure tend to recover more slowly from recessions, but using evolutionary theory we predicted the opposite, and U.N. trade data indicate we were right," said Michael Deem, the John W. Cox Professor in Biochemical and Genetic Engineering and professor of physics and astronomy at Rice.

Deem and co-author Jiankui He, a graduate student in physics and astronomy, studied United Nations trade data from the past 40 years and found the global economy has tended to react more sharply to recessions and to recover more slowly from them as globalization has increased.

The concept of modularity is key to understanding their findings. In biology, a module is a structure that is part of a larger system but can also function partly on its own, in much the same way that a modular piece of furniture might function either by itself or as part of larger ensemble. In living things, modularity is rampant at every scale -- from the genomes inside cells to the organs in human bodies.

In 2007, Deem and former postdoctoral fellow Jun Sun offered an explanation for biological modularity. They showed that modularly arose spontaneously in systems where evolution occurred relatively slowly and where information -- like genes -- could be swapped.

"What we showed in 2007 was that under certain conditions, a changing environment leads to the development of a modular structure," Deem said. "We considered the world trade network to be an evolving system, and we know information in the form of business practices is readily swapped throughout the trade network. Since it matches the conditions for our theory, we hypothesized that it would also follow the same physical rules."

To test their idea, He and Deem had to create a mathematical description of the global trade network. Scientists often use a tree-like structure to study networks -- much like a geneologist might use a family tree to describe family relationships. By applying a tree-like geometry to the U.N. data, Deem and He computed a variable called the "CCC" that described the amount of modularity in the global trade network for any given year. In a "flattened" global economy, CCC is low, and it increases as modularity in the trade network increases. Examples of increased modularity could include protectionist tariffs or regional trade associations, each of which acts to restrain trade between countries.

"Another of our predictions was that recessions would cause the world trade network to become more hierarchical, and this is something that was borne out by the data as well," Deem said. "With increasing globalization, we see the CCC trending down since 1969, but we also see it increasing, for a brief period, after each recession."

Deem and He found the trend held true for three major recessions and four minor ones over the past four decades.


'/>"/>

Contact: David Ruth
druth@rice.edu
713-348-6327
Rice University
Source:Eurekalert

Related biology news :

1. Nanoscale coating protect products -- and the economy
2. Rise or fall of reef fish driven by both economy and ecology
3. Saving the economy and saving the planet
4. Synthetic catalyst mimics natures hydrogen economy
5. EPA awards competitive grants for students to design sustainable technologies that help environment and economy
6. Improved adhesive for products like transparent tape could benefit biofuels economy
7. Rebuilding flood plains, agriculture, economy
8. For insulin sensitive overweight patients, 1 session of exercise improves metabolic health
9. Sensitive nanowire disease detectors made by Yale scientists
10. Caltech scientists engineer supersensitive receptor, gain better understanding of dopamine system
11. Sensitive laser instrument could aid search for life on Mars
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:8/15/2017)... 2017   ivWatch LLC , a medical device company focused ... announced receipt of its ISO 13485 Certification, the global standard for ... for Standardization (ISO®). ... 400 Continuous Monitoring device for the early detection of IV infiltrations. ... "This is an important milestone for ivWatch, ...
(Date:6/23/2017)... and ITHACA, N.Y. , June ... Cornell University, a leader in dairy research, today announced ... designed to help reduce the chances that the global ... onset of this dairy project, Cornell University has become ... Sequencing the Food Supply Chain, a food safety initiative ...
(Date:5/16/2017)... , May 16, 2017  Veratad Technologies, LLC ... of online age and identity verification solutions, announced today ... Identity Conference 2017, May 15 thru May 17, 2017, ... Building and International Trade Center. Identity ... globe and in today,s quickly evolving digital world, defining ...
Breaking Biology News(10 mins):
(Date:10/10/2017)... , ... October 10, 2017 , ... San Diego-based team ... its corporate rebranding initiative announced today. The bold new look is part of ... the company moves into a significant growth period. , It will also expand its ...
(Date:10/10/2017)... ... October 10, 2017 , ... Dr. Bob Harman, founder and ... San Diego Rotary Club. The event entitled “Stem Cells and Their ... 300+ attendees. Dr. Harman, DVM, MPVM was joined by two human doctors: Peter ...
(Date:10/10/2017)... CALIFORNIA (PRWEB) , ... October 10, 2017 , ... ... technological innovation and business process optimization firm for the life sciences and healthcare ... BoxWorks conference in San Francisco. , The presentation, “Automating GxP Validation for ...
(Date:10/9/2017)... ... ... The award-winning American Farmer television series will feature 3 Bar Biologics in an ... on RFD-TV. , With global population estimates nearing ten billion people by 2050, ... a growing nation. At the same time, many of our valuable resources are becoming ...
Breaking Biology Technology: